Unless the government offers incentives to facilitate investment in the tourism industry, most potential investors will not finance related projects given the relatively low number of inbound tourists, according to the CEO of Iran Touring and Tourism Investment Company.
Speaking in a press conference on Tuesday, Mohsen Qarib said the company’s expectations are not farfetched, IRNA reported.
“What we are asking of the government is in line with the Iran’s sixth [five-year economic development] plan (2016-21),” he said, adding that the government’s cooperation is key to meeting tourism targets.
He said the government could aid investors by providing lands free of charge to build hotels.
“Financially, it makes no sense to investors to spend upward of $3 million to build a hotel (including the purchase of a plot of land) while inbound tourism numbers remain low,” he said.
“They need an incentive, otherwise that money will go to a different sector.”
The government has been asked to lift import duty on hotel equipment for newly-built establishments.
Qarib pointed to Iran’s ambitious goal of attracting 20 million tourists annually by 2025 and said the rate of hotel construction in the country, which needs at least 400 more hotels by 2025, is unacceptable.
Ali Farrokhmehr, the president of Tehran Hotels Association, said only two hotels have been built in Tehran over the last 30 years, while the Iranian capital alone needs 100 more hotels to accommodate the expected inflow of tourists.
The opening of two international hotels managed by the French group AccorHotels made headlines last week, mostly because it marked the entrance of reputable hotel brands into Iran’s travel market for the first time since the 1979 Islamic Revolution.
“Years of western sanctions prevented international hotel chains from investing in Iran, which hurt the industry. But things are changing now,” Qarib said, adding that a fundamental overhaul of regulations in the sector is needed to move forward.
Experts believe the presence of international hotel brands in Iran will help attract foreign travelers and improve the quality of services.
Economic Advantages
Qarib pointed to the industry’s financial benefits and said investment in the sector can create jobs and boost Iran’s stagnant economy.
The international travel industry has been experiencing a steady growth over the last few years, as suggested by the World Travel and Tourism Council’s annual reports.
In 2014, the industry contributed $7,580 billion in GDP and 277 million jobs to the global economy.
During 2015, the industry’s contribution to global GDP is forecast to grow by 3.7% and employment by 2.6%. This demonstrates the sector’s enduring ability to generate economic growth and create jobs at a faster rate than the global economy, which is expected to grow by 2.9% in 2015.
By the end of 2015, the sector will contribute $7,860 billion, 10% of global GDP, once all direct, indirect and induced impacts are taken into account. The sector will account for 284 million jobs, 9.5% of total employment, or one in 11 of all jobs on the planet.
Long-term forecasts for the travel industry show continued annual growth of 3.8% over the next 10 years to $11.4 trillion. By 2025, the global tourism sector is expected to contribute 357 million jobs, some 73 million more jobs than 2015.
Need for Qualified Managers
Qarib said in spite of all the problems facing the industry, the lack of qualified people in top management positions has hurt the sector more than anything else.
“Most people at the top are inexperienced individuals whose qualifications have nothing to do with the travel industry,” he said, adding that the sector has been deprived of people with technical know-how for 30 years.
“Lack of qualified people has led to severe mismanagement of the sector, as can be seen in the destructive impact of tourism on the environment.”
Qarib noted that the industry is in need of an overhaul and said without government assistance, the country’s stated goals are mere rhetoric.
